Arbitration Panel Renders $54 Million Award Against Citigroup in Case Involving MAT/ASTA Municipal Arbitrage Investments


A Financial Industry Regulatory Authority (FINRA) arbitration panel in Denver has ordered Citigroup Global Markets, Inc. to pay over $54 million in damages for its abusive conduct in marketing and managing various investments including municipal bond hedge funds known as MAT/ASTA. The arbitration panel issued their award on April 8, 2011.

The panel awarded the three Claimants 100% of their requested compensatory damages, $34,058,948, plus 8% post-award interest, $17,000,000 in punitive damages, $3,000,000 in attorney’s fees, $33,500 for their expert witness fees, and ordered Citigroup to pay all hearing session fees ($26,100) plus the non-refundable portion of Claimant’s filing fee.

The arbitration focused on Citigroup’s disastrous MAT/ASTA municipal arbitrage funds, including, but not limited to, MAT Finance, MAT Two, MAT Three, MAT Five, ASTA Finance, ASTA Three, and ASTA Five. Despite their high risks, the funds were marketed as an alternative to municipal bond portfolios. The funds also falsely emphasized their strong risk management and controls.

The MAT/ASTA funds also suffered from serious mismanagement problems. Another arbitration panel previously found that Citigroup and Citigroup Alternative Investments, LLC mismanaged the MAT/ASTA funds and failed to supervise its employees. This is significant for early investors. Because Citigroup’s mismanagement began during 2006 and continued through early 2008, even early MAT/ASTA investors in the funds have mismanagement claims against Citigroup. This greatly expands the number of potential clients who can pursue valid claims against Citigroup and its affiliates.

The Claimants were represented by Aidikoff, Uhl & Bakhtiari of Beverly Hills, California; Maddox Hargett & Caruso, P.C. of Fishers, Indiana and New York, New York; Page Perry of Atlanta, Georgia; and David P. Meyer & Associates of Columbus, Ohio.

J. Boyd Page, the senior partner of Page Perry, said: “Phil Aidikoff, Steve Caruso and Ryan Bakhtiari did a fabulous job of trying the case for our legal team. The magnitude of the punitive damage award underscores the seriousness of the misconduct that was proved. Punitive damages are not generally awarded unless the misconduct rose to the level of fraud, malice, or purposeful misconduct.”

Mr. Page said: “This award clearly signals the reprehensibility of Citigroup’s misconduct. MAT/ASTA investors who have not yet filed claims should consider their options. It may not be too late, but investors should act promptly to protect their rights.”

Page Perry is an Atlanta-based law firm with over 125 years collective experience representing investors in securities-related litigation and arbitration. Page Perry is counsel in numerous MAT/ASTA cases involving tens of millions of dollars in losses, and continues to investigate and pursue FINRA arbitrations on behalf of Citigroup/Smith Barney customers who suffered losses in fixed income alternative investments, including MAT, ASTA and Falcon. For further information, please contact us.